Some state-backed property insurance migrating to private market

KATHRINE SCHMIDT Staff Writer

Sunday

Jun 22, 2008 at 8:00 AM

HOUMA -- Owners of nearly 1,200 Terrebonne and Lafourche homes and businesses will soon be able to opt out of government-backed property insurance against damage, wind, and hail in favor of a private policies.

The Louisiana Citizens Property Insurance Corporation, the state-backed insurer of last resort, is giving nearly 27,000 of its personal and commercial policyholders the option of switching to private companies and therefore potentially lower rates when renewal time comes around.

"That’s good news for consumers, because we need increased competition in our property insurance market," Insurance Commissioner James Donelon said in a release. "More choices lead to better prices."

Officials said the development marks an initial positive step toward stimulating competition, and is a sign that insurance is becoming easier to obtain.

"More companies are taking a look at Louisiana," said Robert Page, insurance agent and president of Charles A. Page & Sons Insurance in Houma. "Six short months ago, we had no options other than La. Citizens."

Now, he said, "We’re actively taking people out of Citizens."

INSURANCE HISTORY

After the 2005 hurricanes, consumers in Terrebonne and Lafourche had especially difficult experiences getting property insurance.

For a time, the only option for new coverage was Citizens, a nonprofit entity that held more than 150,000 policies at one point after Katrina and Rita had done their damage.

The protection differs from flood insurance, which is issued only by the federal government’s National Flood Insurance Program, and whose rates are determined largely by geographic zones that factor in the site’s flood risk.

Property rates also consider location, but are based more on factors like the age of the roof, compliance with building codes, and other measures of strength of the individual building, officials said.

Because of a Louisiana law that barred insurers from dumping policies held for at least three years, many people insured before the storm could still get existing coverage renewed. But rates are high regardless, and until recently new policies were hard to come by.

PLAN DETAILS

That was the problem targeted by

the Insure Louisiana Incentive Program. Passed by the Legislature last year, it aims to ease Citizens’ caseload and bolster competition among private insurers. Those participating: ASI, Imperial, Occidental, Americas and Southern Fidelity, which is taking on the lion’s share of the policies overall and in our parishes.

According to the Louisiana Department of Insurance, the program will allow for the transfer of 525 personal and commercial policies in Terrebonne Parish.

John Wortman, CEO of Lousiana Citizens, said that’s about 6 percent of the approximately 9,000 policies in Terrebonne Parish. In Lafourche, it’s 665 of the parish’s 7,500-8,000, or about 9 percent.

The policyholders chosen were notified by June 1, the Department of Insurance said, and the first renewals will be coming up in October.

But Wortman said he thought the renewals were just the beginning. "I think they’re all planning on writing new policies, and they’ll probably take more business out of Citizens, too," Wortman said.

WHAT YOU SHOULD KNOW

Even if you’re not a Citizens policyholder or you haven’t been notified, the officials suggest calling your agent to see if you’re eligible for new private options.

"I would say it’s getting more available," Wortman said of new private policies. "They need to check with their agent frequently to see if there’s anything opening up in the private sector."

Page cautioned that such policies would likely be cheaper, but might not offer the same coverage as Citizens. "Everybody needs to understand what the company is offering you and see if it’s the right move for you," Page said.

Of course, this is all assuming no more hurricanes hit. "If we had another Katrina it wouldn’t help us right now," Wortman said. "We continue to pray that the weather stays good."

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